Corrupting activities and economic development

BEVERLEE B. ANDERSON, CALIFORNIA STATE UNIVERSITY SAN MARCOS, USA

Purpose – The purpose of the paper is to explore the relationships of different types of corruption and selected economic measures that appear to contribute to a country’s sustainable economic development.

Design/methodology/approach – The research used selected data from the World Economic Forum Executive Opinion Survey on corruption activities (Irregular Payments and Bribes, the Diversion of Public Funds, Organised Crime, and Favouritism in Decisions of Government Officials) and Ethical Behaviour of Firms. The economic data (FDI, GDP, GDP Growth and Capital Formation among others) is from the World Bank database. A series of statistical models were developed to examine the relationships among different types of corruption and a country’s economic development.

Research limitations – The research is limited by the availability of data from reliable sources and the availability of data on a limited number of corruption activities. Only four aspects of corruption are examined in this paper. Only selected aspects of a country’s economy were examined. The variables analysed in the study were not available for each of the 179 countries.

Findings – The findings are mixed, showing that some types of corruption have greater negative impact on specific aspects of economic development.

Originality/value – This study builds on previous work by Anderson (2013, 2012) that used Transparency International’s Corruption Perception Index (CPI) as a global measure of corruption. This study, in contrast, uses the results of the World Economic Forum Executive Opinion Survey, to indicate the perceived level of different types of (components) corruption. By using more specific measures of corruption, there is a better understanding of the relationships between corruption and economic development.

Implications – Corruption may have a beneficial as well as a negative impact on economic growth and development.